Most company directors and their staff see an audit as a compliance burden or a box ticking exercise, but actually there are various benefits to be gained from the process.
The rules regarding who requires an audit are not straightforward and beyond the scope of this article and you should speak to a firm of accountants to see if an audit applies to your company. In addition, recent changes have meant that some companies have been taken out of the audit regime. In simple terms all non-small companies will require to have their financial statements audited.
A company is not small if it meets 2 out of 3 of the following:
- Turnover of more than £10.2m
- Assets worth more than £5.1m
- 50 or more employees on average
An audit is an independent review of the financial statement, where an opinion is given as to whether they give a true and fair view. Essentially, they provide credibility to the financial statements which can be useful;
- If an owner is looking to sell their company reliance can be placed on them and this can help when negotiating with potential acquirers
- Credit rating agencies – An audited set of financial statements can help improve a companies credit rating which is clearly beneficial if the directors are looking to raise finance from various sources for example bank loan to supplier credit
- Stakeholders may have a vested interest in the company be it employees or shareholders (especially if they are not directors involved in the day to day running) on company performance
- An audit will help to identify weaknesses in the accounting system and will allow the auditor to suggest improvements
- Small companies can also benefit if they are about to meet the audit threshold as it may prevent fraud from occurring if staff are aware that the financial statements are subject to audit
At Sobell Rhodes we specialise in Audit, setting up strong financial controls and sound management procedures and pride ourselves on our ability to give proactive advice. If you would like to discuss how we can help you then please contact our Audit Director Jeremy Asher on 020 8429 8800 or firstname.lastname@example.org